Elastic Q1 Earnings Call Highlights

Elastic NYSE: ESTC reported first-quarter fiscal 2027 revenue of $478 million, up 15% from a year earlier, as the company cited continued sales execution and demand across its search and AI, security and observability offerings. Sales-led subscription revenue rose 18% to $399 million, while non-GAAP operating margin reached 16.2%.

Chief Executive Officer Ash Kulkarni said the company exceeded all of its guided metrics and began the fiscal year with accelerating constant-currency growth in both total revenue and sales-led subscription revenue.

“Customer demand was strong across all solution areas, especially in search and AI and security,” Kulkarni said.

Elastic ended the quarter with more than 1,800 customers with annual contract value of at least $100,000. The company added more than 80 net new customers to that cohort during the quarter, its largest increase to date. Customers in the group accounted for 90% of sales-led subscription revenue, compared with 87% a year earlier.

Chief Financial Officer Navam Welihinda said the growth reflected improvements in sales capacity, productivity and pipeline generation, as well as ongoing consumption of commitments secured in fiscal 2026. Current remaining performance obligations, or CRPO, totaled $1.2 billion, growing 21% as reported and 20% on a constant-currency basis. Total RPO was $1.9 billion, up 27%.

Kulkarni said the results indicated that customers were increasingly making multiyear commitments to Elastic’s platform as they pursue AI-related transformations. Elastic’s net expansion rate was 111%, compared with 112% in the prior quarter. Welihinda said the metric is calculated on a trailing four-quarter basis and should improve within four quarters as the company’s constant-currency revenue growth accelerates through fiscal 2027.

Kulkarni said Elastic is positioning Elasticsearch as a data store and retrieval layer for AI applications that require text, vector and hybrid search across structured and unstructured data. During the quarter, the company released VectorDB index mode and auto-calibration capabilities intended to provide vector-search performance without manual tuning. The company also extended Jina’s multimodal and multilingual semantic-search capabilities, including embedding and re-ranker models, to on-premises and air-gapped deployments. Elastic said its Agent Builder product added agent observability, monitoring and human-in-the-loop approval workflows. More than 37% of Elastic’s customers with ACV above $100,000 were using its AI features at the end of the quarter,...